According to research by McKinsey two thirds of business transformations fail to adequately meet their expectations. Where the changes are meant to reduce costs, only one in ten companies manage to achieve cost savings after four years. Not much to celebrate? Sometimes these failures are down to poor execution. Sometimes down to poorly defined needs and even failure to define the needs correctly in the first place. Often however, it’s down to underestimating the skills needed by the people to achieve the objectives of the change programme.
Why does this matter now?
We were getting used to working in a volatile, uncertain, complex and ambiguous world where technological disruption was driving change at an accelerating pace. Most organisations had dealt with more change in the first 19 years of the 21st Century than they had seen in the second half of the previous century. Every new chief executive was obliged to bring in a new change programme on their appointment. Employees became used to living in a state of permanent impermanence as one change programme was replaced with a new three-letter acronym change programme. Transformative change was de rigeur with the full digitisation of economies, growth of big data and surges in the application of AI.
Little did we know what was about to come next.
With the global pandemic – we experienced change on steroids. Changes were introduced overnight and organisations made operational shifts that previously would have taken years to achieve. For example we have seen an explosion in the growth of remote working. This will force us to rethink the purpose and the role of the office. We can be certain businesses will embrace and drive even more change into their operations in the months and years ahead.
Yet we know, that two thirds of these changes are not going to realise their ambitions. Why? Because the change sponsors and project teams will continue to forget they are working with people. Building staff technical capabilities and their interpersonal skills will be key.
Many businesses invest in learning and development but then fail to see behavioural changes in the workplace. There are many reasons for this but we know from John Dewey and Jean Piaget that knowledge and experience are bound together.
Unfortunately in the workplace may businesses fail to make full use of the experiential learning. This is a missed opportunity. We should be creating environments where people can participate in active and shared learning. In terms of change programmes, it’s about starting with the “Why” as advocated so powerfully by Simon Sinek. It’s then about experiencing and exploring (trying things out), sharing and reflecting (what just happened?), analysing and discussing (what is important?), learning together (asking the so what question) and then applying the lessons (what does this mean to me?).
Too often the change programmes fail because leadership overlooks the importance of capability building and dealing with the pyschological needs of their people. Not everyone will be starting from the same position as the leader and the need for communication and the support for staff in the change programme is so often over-looked. Experiential learning, and its bedfellow – the creation of a culture of psychological safety, are critical requirements for a successful transformation.
We are talking about People
Transformation programmes forget to concentrate that they are dealing with people. We are not the wholly rational and logical creatures assumed within traditional economic theory. This mindset seems to have infiltrated HR management practices. Even the language is interesting – “humans as resources” which accords with national resource accounting. Instead we are driven by emotions and logic. Many organisations have shifted from talking about HR to talking about People. A good first step, although the mindsets and behaviours remain the same.
We are all unique and gloriously imperfect in our own ways. Instead of treating staff as a homogenous group of individuals management should embrace the cognitive diversity of their teams and find ways to play to these strengths. A tool such as Emergenetics helps us to bring out the best in our people by recognising everyone’s strengths and contributions. Instead of attempting to ignore this inconvenient truth, management should celebrate and encourage that diversity in the workplace.
It doesn’t have to be this way
Businesses are going to continue to transform as they adapt to a world of recurring pandemics and environmental challenges. And they have a choice. We can carry on as we have always done. We all know more of the same generates more of the same. So why would we do that?
Instead let’s take change seriously. Let’s put people front and centre. Let’s create organisations that are human-centred. Gary Hamel and Michael Zanini argue that we need to start creating organisations as amazing as the people inside them. The change programmes of the future need to invest in the resources to ensure momentum and achieve progress. They need to clearly define roles and encourage co-creation. They need to invest in experiential learning to drive up employee engagement. And of course they need to communicate, communicate and communicate.